The statue of Augustus the Strong is resplendent in a new coat of gold leaf. The clattering trams crossing the River Elbe are also in new livery. The royal palace with its fine stucco work is surrounded by diggers and piles of sand.

The city council is particularly keen to promote a golden age that was probably only gilt-edged for some, and concrete over as quickly as possible the city's communist inheritance. By 2006, the city's 800th anniversary, the building sites will have gone, along with any trace of the past 60-odd years.

Dresden was at the western reaches of the Iron Curtain and is now at the eastern end of fortress Europe. It has skipped, apparently effortlessly, from one side to the other of one of the best defended borders in the world. It is selling itself as Florence on the Elbe, but such a comparison is unhelpful. Bestriding the fast flowing river, it has its own charm though it is too laid-back, too muted to be Italian.

In the old town, Baroque architecture dominates, but there is also modern art, parks and forests, an off-beat social life and, if you know where to look, the tell-tale signs of the former East Germany.

The Frauenkirche is a potent symbol of what is happening to the city. Almost completely destroyed by the allied bombing in 1944, the ruins were left as a charred memorial to those who died (estimated to be at least 35,000 people).

These days, it resembles a modern-art installation, encased as it is in scaffolding, but soon it will rise like a phoenix from the cold war ashes. A memorial once again, this time to reconciliation.

A manageable walk from here, along mainly pedestrian-only routes, offers enough Baroque splendour for even the most voracious of appetites, from the Royal mews, to the Semper Opera House and the Swinger Palace. (The tourist office has a map in English that details this walk.)

Each is a splendid building in sandstone with bronze and gilded turrets and cupolas. At the Swinger you will also find gardens, the Old Masters' Art Gallery (open 10am-6pm every day except Monday, Dm7) and a fine array of the famous Meissen porcelain that is created just down the river and is known asDresden's gold (museum open 10am-6pm every day except Thursday, Dm3).

Meissen ceramic also creates the impressive Furstenzug, a six-meter-high frieze depicting the rulers of the Saxony region from 1123 to 1904. By contrast the souvenir vendors opposite have postcards of the 1944 devastation and photos of the piles of the dead. But it seems that the town council is eager to erase this shocking memory and bury it under gilt and plaster curlicues.

What to see

The new hero of the city is Augustus the Strong (1670-1733), who made Dresden the capital of his kingdom that incorporated this region of Saxony as well as a part of Poland. Augustus is a rather dubious choice for a hero considering that he was little more than a Russian puppet and his nickname is said to come from the number of mistresses he took rather than his abilities as a ruler.

Forty-odd years of rule under the flag of the German Democratic Republic are also being dismantled. There is an empty plinth between the fountains in Prager Strasse which once held a giant statue of Lenin, flanked on either side by clench-fisted workers carrying a flag, presumably red. It is said that one person is collecting all the discarded Lenin statues and keeping them all in his back garden. Perhaps he has a neighbour who has taken in all the distinctive Trabant cars, which have almost completely disappeared from the streets during the past 10 years, although matchbox models are sold in the tourist office.

The pedestrianised Prager Strasse now overflows with shops, cafés and fast food, much like any other west European city street. But on the left side as you walk towards the Elbe, a department store is covered in small silver pyramids, a tantalising left-over of communist-style architecture, It used to be the only place displaying the electrical gadgets and consumer goods that no ordinary citizen could afford.

Across the river from the old city, Neustadt has seen a blossoming of the underground youth and artistic culture that was such a persistent thorn in the side of the GDR. The area has little courtyards, opening one into another, each with its own slightly off-beat style. In one, drainpipes have been transformed from an ordinary building accessory into an art form.

Nightlife

In Gorlitzer Strasse, there are bars and restaurants of every description, and the present exchange rate makes most places cheap for the British visitor. As you linger late into the night, eating, drinking and listening to music, you may well wonder how it was possible for any regime (even one that was backed by a terrifying secret police as well as the Russian army) to keep all this creativity and vitality repressed.

Out of town

When the centre of town gets too much, Dresden has much to offer in terms of wide green spaces. The Grosser Gartens also has a baroque palace, botanical gardens and a zoo. Or you can take a stroll and then enjoy a picnic along the banks of the Elbe.

Alternatively, hire a bike from the central station (at platform 3, for a cost of Dm10 a day) and cycle through the forest on the east side of Neustadt to an open-air pool. Here you can cool off and sunbathe among the pine trees. A cycle path stretches from the Czech border via Dresden to Meissen.

Further afield there is Meissen itself and the Sachische Schweiz national park in the Saxony Switzerland part of Germany. There is a strange otherworldliness to the sandstone features that have been carved out among the trees over the course of the past six million years. Paths follow streams that lead inevitably to the wide curves of the Elbe. From there, a leisurely boat trip takes you back to the heart of Dresden.

Another day-trip by train or coach from Dresden is Moritzburg. It was a hunting lodge for Augustus the Strong and is inevitably Baroque in style. So walk round the park and enjoy the lake.